Refinancing rate of the Central Bank of the Russian Federation for today 2021

2024 Author: James Gerald | [email protected]. Last modified: 2023-12-17 14:00

In the process of acquiring economic knowledge, incompetent people confuse the refinancing rate and the key rate from the Central Bank of the Russian Federation. However, these are different financial instruments, changes in which may affect the receipt of certain information and the conditions set by banks. The importance of indicators for today and for the whole of 2021 is beyond doubt.

Features of this concept

Since 1992, the importance of introducing the concept of the refinancing rate today has slightly decreased, since the key rate from the Central Bank of the Russian Federation began to be given primary importance. However, it is still an important instrument of monetary policy, which has retained the functions of an indicator by which one can judge the real value of the national currency.

The year 2021 did not change the content of the terminological concept as an interest rate that determines the conditions for cooperation between Russian banks and the general population. No changes exclude life circumstances in which the citizens of the country may need:

• issuance of loans;
• keeping money in deposits for the purpose of safety and receiving, albeit small, but profit.

In Russia, the refinancing rate of the Central Bank of the Russian Federation is the conditions under which a bank can obtain credit resources to conduct its further work. The higher this indicator, the less profit a commercial organization can get.

This is because the profit for today is the difference between the interest of the Central Bank and those that the bank can offer to the client. Ultimately, the burden of paying interest falls on the shoulders of a person who takes money on credit, because he pays both the interest of the Central Bank and the direct premium made at the place of circulation.

In 2021, Russian banks will continue to borrow money to pay off the old, less profitable loan or get new ones aimed at prolonging the loan term. Those who have applied to the bank for refinancing are familiar with the procedure for restructuring or extending the maturity of debt or less significant interest.

Additional functions

The refinancing rate is becoming important today, since the country is still dominated by a difficult economic situation caused by the forced quarantine during the pandemic. It led to stagnation of the economy, created preconditions for unemployment and a drop in consumer demand, even for basic necessities.

The application of the rate of the Central Bank of the Russian Federation in 2021 will be significant under the following conditions:

• calculating special payments that the government intends to make to entrepreneurs in order to support the industries indicated in the list of particularly affected by the pandemic;
• as a settlement tool, if a loan agreement was concluded, but for some reason it did not indicate interest;
• determining the degree of compensation due to an entrepreneur who has delayed the payment of wages to employees, if it comes to the onset of liability provided for by law for such an offense.

In 2020, the refinancing rate was 4.5%. Due to the permanent influence of this indicator, determined by the Central Bank of the Russian Federation, on the amount of tax on a bank deposit, material compensation, and even a penalty for payments on loans, the Russian government refused to set the rate 4 years ago and gave this prerogative to the Central Bank of the country.

After relative stability (the indicator could change throughout the year, and the final result is indicated in the statistical reports), when from 2012 to 2015 it was 8.25%, with an enviable frequency it was two years (2016 and 2018), 10% each, and in 2017 and 2019 - 7.5%.

The meeting of the council takes place 5 times a year, but sometimes it is inappropriate when some unforeseen circumstances arise in the country. In 2020, there were repeated rate reductions by 25 and 50 basis points, and the contingencies were circumstances directly or indirectly related to the prevailing pandemic in the country.

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Forecasts for this year

Some foreign analysts admit the maximum degree of probability of further downgrade. This theoretical conclusion was made not only against the background of last year's policy, when the regulator constantly reduced the indicator, but also on the statement of the Chairman of the Central Bank E. Nabiullina.

Today, in 2021, last year's trends have become less significant:

1. There is a slight increase in consumer demand, even though some goods increased in value due to increased demand, but the price did not go down during the period of lack of demand.
2. The situation in the economy has stabilized, thanks to the gradual easing of quarantine measures. Against this background, the demand for goods, which the population stocked up in panic before the long holidays, leveled off to a normal level.
3. The Russian government has taken a number of significant measures to support the population from the reserve fund. Hence the possibility of easing the monetary policy, which arose against the background of low inflationary risks.
4. Another possible factor for slowing inflation growth is a high harvest, which was expected in May and was successfully implemented at the end of last year.
5. In 2020, foreign analysts admitted the possibility of a key rate below 4%, and the chairman of the Central Bank spoke about this in her May speech, focusing on low inflationary risks. A record decline has already been noted, but nothing prevents the management from using this indicator to further soften the monetary policy of the financed banks in relation to the population.
6. The expected approximation of the general inflation rate to the set target of 4% did not happen, but this is more the result of the inflation peak passing in the middle of last year than a change in the course taken by the Central Bank of the Russian Federation.
7. According to forecasts of analytical agencies, the refinancing rate by mid-end 2021 can be deliberately reduced to an indicator negative compared to the current inflation rate, and today this can be done to support the economy.

American analysts are confident that the Central Bank has room for maneuver due to direct fiscal support for the economy, the emergence of new taxes for offshore companies and the receipt of large dividends from bank deposits. And this is money from the wealthy strata of the population, which will be additionally generated to the budget.

Summarize

The record drop in the refinancing rate in 2020 can be continued by the Central Bank as a measure to support the economy:

1. The country's main bank has room for financial maneuvers, undertaken as an instrument of financial and monetary regulation.
2. Despite the government's refusal to take part in setting the rate, it introduced measures to slow down the growth of inflation.
3. This policy mitigates risks and provides monetary easing.
4. It all depends on the rate of recovery of the Russian and world economies.